31 March 2020 David Marsh CEO Nigel Rogers - Chairman Overview - - PowerPoint PPT Presentation

Final Results - Year Ended December 2019 31 March 2020

David Marsh – CEO Nigel Rogers - Chairman

2019 results

• Challenging UK climate
• Worldwide 10% revenue growth

H2 over H1

• Financials in line with September

expectations

Overview

Key Activities

• Strengthened Quality Assurance

(QA) & Regulatory Affairs (RA) structure

• Defined Marketing message
• Developed customer base and

strengthened relationships

• Effects of Covid-19 on short-term outlook
• Positive prospects in medium to long-term

2

• Revenues of £10.73m (2018: £10.97m)
• Gross margin 40.4% (2018: 42.6%)
• Increased overhead base in operations and RA/QA
• Impairments to Goodwill (£1.63m) and Development costs (£0.63m)
• Adjusted** PBT of £0.38m (2018: £1.43m)
• Adjusted** EPS 0.05p (2018: 0.21p)
• Cash conversion 127% of operating profit (2018: 118%)
• Closing net cash *£0.47m (2018: £0.38m)

Financial Summary

3

* Net cash comprises cash and cash equivalents of £1.28m less bank indebtedness of £0.81m. ** Adjusted operating margin, PBT & EPS stated before deduction of exceptional costs, impairment of intangibles & amortisation relating to acquisition, and share based payment costs.

Revenue by Geographical Region (Excl. OEM)

UK, 53% USA, 21% Europe, 14% APAC, 5% RoW, 7%

4

“It’s right that the NHS and our suppliers should join the national campaign to turn the tide on plastic waste. Doing so will be good for our environment, for our patients and for taxpayers who fund our NHS.” Simon Stevens, Chief Executive

• f NHS England

FOR A GREENER

Message hitting home!

In the US, it is estimated that

20%-33% of all hospital waste is generated by the

• perating theatres and a

single operation can generate more waste than a family of four produces in one week. **

* Wastage of supplies and drugs in the operating. Esaki RK, Macario A. 2009. s.l. : Medscape Anesthesiology 2009, 2009.

UK – 53% of SI Branded Revenue

• Challenging UK market conditions
• Increase in patients awaiting treatment
• Reduce, Reuse, Recycle, RESPOSABLE
• Customer base growth
• Outlook: uniquely placed to take advantage
• f NHS drive for Sustainability, Covid-19

makes timing uncertain

USA – 21% of SI Branded Revenue

• Significant hospital groups convert to Eco-Cut
• FDA Approval for Elite
• Sales teams trained and Elite launched
• Geographical & structural challenges in US

distribution channel drive need for stronger footprint in USA.

• Outlook: strong in Logi and Eco-Cut

challenging to gain traction with Elite

Market Environment – UK and USA

6

EU – 14% of SI Branded Revenue

• Delay in Elite roll-out in key markets
• Pricing pressure
• Disposable for S. European markets
• Reduce, Reuse, Recycle, RESPOSABLE

effective in France and other smaller markets

• Outlook: uncertain

APAC – 5% of SI Branded Revenue

• New Market Access restricted by QA/RA constraints
• Strong account conversions in Japan, NZ & Australia
• Outlook: continued growth in 2020 with strong Elite

sales across region RoW – 7% Of SI Branded Revenue

• New market access restricted by QA/RA constraints
• Strong account conversions in Canada and new

markets opened in SA & Taiwan

• Outlook: continued growth in 2020 with strong Elite

sales across region

Market Environment – EU, APAC and RoW

7

Market Environment – OEM

AMS – c. 10% of Total Group Revenue

• Extension to agreement to 2024
• Close cooperation on FDA submission
• Expected continued growth
• Supportive through current challenges

Non Medical – c.3% of Total Group Revenue

• Anticipated further RR Orders, reduced on

2019

• Revenue from Refurbishment and Repair

Market Environment – OEM

8

• Net cash £0.47m at year end & currently increased
• Support and flexibility from Yorkshire Bank
• Repaid £1m term loan early Oct 2019, leaving £0.75m outstanding
• Relief from covenants and capital holiday in 2020 Q1
• Offer of increase in unutilised RCF from £0.5m to £1m credit approved
• Options available to restructure funding in Q2, possible via Coronavirus

Business Interruption Loan Scheme

Financial Position

9

• Postponement of all U.K. elective

surgery announced 17 March 2020

• Cancer and other emergency surgery

continues, but very low volume

• European markets effectively closed
• US beginning to show slowdown
• Japan ordering to buffer inventory
• OEM partners offering volume support

Covid19 Impact

Covid-19 Impact on Activity

10

• Followed all appropriate Government H&S advice
• Condensed production activity to match visible demand
• Furloughed non-essential management and staff including sales team
• Implemented short-term salary reductions for all staff above furlough

threshold

• Led by Board implementing 50% reduction in cash remuneration from 1 April
• Using pause as opportunity to plan for optimum restart

Covid-19 Response to date

11

• Navigating a challenging period with resilience
• Whole team approach to problem solving demonstrates commitment
• Streamline operations, QA/RA procedures for MDR implementation
• Maintaining production and inventory to support customers and patients
• Confident of significant market share gains when normality returns

Prospects

12

• Income Statement
• Cash Flow Statement
• Financial Position
• Major Shareholders

Appendices

13

2019 2018

£m £m Revenue 10.73 10.97 Cost of sales (6.40) (6.30) Gross profit 4.33 4.67 Other operating expenses (6.77) (4.33) Other Income

• 0.28

Adjusted EBITDA 1.44 2.36 Amortisation of intangible R&D costs (0.29) (0.35) Depreciation of tangible assets (0.62) (0.48) Adjusted operating profit 0.54 1.53 Exceptional items (0.18)

• Impairment of intangible R&D costs

(0.63)

• Amortisation and impairment of intangible acquisition costs

(1.98) (0.79) Share based payments (0.19) (0.12) Operating (loss)/profit (2.44) 0.62 Net finance costs (0.16) (0.11) (Loss)/profit before taxation (2.60) 0.52 Taxation charge/(credit) (0.02) 0.21 (Loss)/profit attributable to shareholders (2.62) 0.73 Adjusted EPS 0.05p 0.21p

Income Statement

14

Cash Flow Statement

2019 2018 £m £m Cash flows from operating activities Operating profit (2.44) 0.62 Depreciation & amortisation 0.91 1.62 Impairment of Intangibles 2.60

• Other

0.19 0.15 Working Capital (0.54) (0.59) Cash generated from operations 0.72 1.81 Taxation received / (paid) 0.00 (0.07) Interest paid (net) (0.08) (0.09) Net cash generated from operations 0.64 1.65 Cash flows from investing activities (0.52) (0.49) Capex on tangible FA (0.20) (0.09) Capitalised development costs (0.32) (0.4) Cash flows from financing activities (0.75) (0.33) Issue of equity 0.20

• Bank loans

(1.30) (0.32) Repayment of lease obligations/other 0.35 (0.01) Net change in cash & equivalents (0.63) 0.83 Adjusted Net cash 0.47 0.38 15

Financial Position

2019 2018 £m £m Tangible assets 1.96 0.93 Intangible assets 7.61 10.19 Total non-current assets 9.57 11.12 Inventories 2.93 2.08 Trade receivables 1.95 2.58 Other current assets 0.59 0.46 Trade & other payables (1.52) (1.55) Accruals & deferred income (0.32) (0.64) Total working capital 3.62 2.93 Cash & equivalents 1.28 2.49 Bank borrowings (0.81) (2.11) Lease obligations (1.28)

• Total net cash

(0.81) 0.38 Adjusted net cash 0.47 0.38 Other (0.20) (0.01) Net assets/total equity 12.19 14.42 16

Getz Bros & Co (BVI) Inc 13.7% Directors 12.2% BGF Investments 7.6% Ruffer LLP 7.5% Healthinvest Partners AB 4.9% Liontrust Asset Mgt 4.7% Hargreaves Lansdown AM 4.2% Mr CWN John 4.2% Cavendish AM 4.1% Unicorn AIM VCT plc 3.4% Interactive Investor 3.3%

Major Shareholders

17